Services

Business taxes can be complicated to prepare, but we try to keep it as simple as possible. Our process is to have you to send us a copy of your business financials, we start preparing your tax return, and then we will ask you clarifying questions and discuss tax saving opportunities via email or phone. We will then send you a copy of your return to review and ask us questions. That's it! Our process is simple, but sometimes our clients like to challenge us. The most common challenge is messy accounting records.

The type of income tax return that a business needs to file depends on the entity structure, IRS elections, and business ownership. There are pros and cons to each entity type that we often discuss with clients during tax strategy meetings. We currently prepare the following tax returns for our clients:

• Partnerships
• S Corporations
• C Corporations
• Foundations
• Charitable Organizations

A Limited Liability Company (LLC) can be filed in three different ways depending on the ownership. When there is just one owner of an LLC it is considered as disregarded for taxes and is shown on Schedule C of the owner's personal tax return. An LLC that is owned by two or more people usually has to file a partnership tax return. But any LLC that elects to be taxed as an S-Corporation, would need to file an S-Corporation tax return.

Call or email us today to discuss your business tax situation and how we can help!

What is R&D Tax Credit?

The Research and Development Tax Credit is a credit for taxpayers who develop, design, enhance, or improve products, formulas, software, or processes. This credit is intended to support companies that pursue innovation. It is one of the best ways to reduce a business's tax liability because tax credits are dollar for dollar savings. For example, if your business qualifies for a $100,000 R&D Tax Credit, you literally just saved $100,000 in taxes! And since the R&D Tax Credit works as a percentage of qualified expenses, there is no limit on how much money you can save.

Qualification requirements

The first step in calculating the R&D tax credit is to determine if your activity qualifies for the credit. And the activity must pass each of the following 4-part test.

1. Technical uncertainty
2. Process of experimentation
3. Technological in nature
4. Qualified purpose

What expenses qualify?

Step two is gathering expenses, support and documentation for the credit. Qualified R&D expenses (QREs) are employee wages, contract labor, and supplies that are directly connected with the R&D activity. This credit is technically called "Credit for increasing research activities". Thus, a taxpayer will only obtain a credit if their QREs are higher than previous year expenses. The documentation is the most important part of gathering this information to support the expense and is best to be gathered in real-time.

IRS requirements

The IRS likes auditing taxpayers who take large R&D tax credits because if they find an error, they can collect a lot of taxes. So if your R&D tax credit is small then you probably don't need a full R&D Tax Credit report completed by the tax accountant. This report is not required to be sent to the IRS unless the taxpayer is selected for an audit. The report would detail why the activity qualifies for the credit, what expenses were used in the calculation, tax law supporting the credit, and calculation results. So step three is completing the calculation and the report (if needed).

Summary

The R&D tax credit is complicated each step in the process, but the tax savings are worth the extra work - especially when the business resides in a state that gives an additional R&D tax credit. Below is an interactive graph (not visible on mobile view) showing how much money taxpayers saved in 2014 using the R&D tax credit separated by industry (data is only shown for Corporations). Call or email us today to see if your company qualifies for the R&D tax credit.

What is a Cost Segration?

A Cost Segregation is the act of splitting a real estate property into separate asset classes (land, building, personal property, land improvements, etc) in order to depreciate parts of the building faster. The best time to complete a Cost Segregation is the first tax year in which you purchase a building. However, if you've owned a property for a few years and would now like to take advantage of a Cost Segregation, you still have this option but an additional form will need to be filed with your tax return (Form 3115 - Application for Change in Accounting Method).

Tax benefits

The tax benefits related to a Cost Segregation is all related to Time Value of Money. A building can ultimately only depreciate the cost of the building (land typically does not depreciate). Thus a residential rental building that would be depreciated evenly by the IRS over 27.5 years without a Cost Segregation, could accelerate the depreciation in the early years with less depreciation in the later years with a Cost Segregation. This increases your Time Value of Money because you save more money in taxes now. As an easy example: would you rather have $10,000 today or $10,000 twenty years in the future?

Residential rental property

For buildings that cost under $1 million, our clients love what we call a mini cost segregation. This mini cost segregation splits a building into its separate asset classes as best as we can using limited resources. And since this is a "mini" cost segregation, our price is low which gives our clients the highest Time Value of Money possible. The risk is that the IRS disagrees with our asset valuations and we may want to complete a Full Cost Segregation after the IRS has selected your tax return for an audit.

Commercial property

For buildings that cost over $1 million, our clients generally prefer a Full Cost Segregation study. This gives a more detailed Cost Segregation that will give greater audit protection because the documentation used to substantiate the asset valuations would be created during the study. This would include inspecting the facility, taking several pictures, using nationally accepted cost estimating databases, and creating a clean report that can be handed to the IRS in the event of an audit.

Conclusion

Taxpayers save money by utilizing this Cost Segregation strategy because of the time value of money. Call or email us today to discuss how we can save you additional money in taxes this year!

The majority of Americans file their taxes using an DIY online tax software like TurboTax, H&R Block, or TaxAct. These are great options for taxpayers who have simple returns and who are comfortable answering the many tax questions the software will ask. And if your tax return is really simple these companies also have free versions of their software.

At Timp Accounting, we prepare individual tax returns across the country for small business owners, rental property owners, and other taxpayers who don't want to do it themselves. See below for an interactive map (not visible on mobile view) showing the average Adjusted Gross Income (AGI) for each state (not adjusted for buying power). We utilize the convenience of technology and combine it with a personal touch. No appointment needed! Our process is simple:

1. Answer our Yes/No online Tax Questionnaire that helps us know what items we need for your tax return. If you don't know the answer, you can leave it blank.
2. Upload copies of your tax documents (W-2s, interest income statements, mortgage interest statements, student loan interest expense, etc) to our ShareFile portal.
3. We start preparing your tax return and will call or email you with any questions that we have (missing documents, tax saving opportunities, etc).
4. We will send you a completed draft copy of your tax return for your review and to give you a chance to ask us any questions.
5. If everything looks good, we will then send you an electronic signature request.
6. And lastly, your return is e-filed by us and all documents are saved password free on ShareFile for future access.

Our goal is to give you the highest tax refund possible - guaranteed! We get a lot of satisfaction from making taxes as simple as possible for our clients and saving them a lot of money. You can trust that your return will be done right. Call or email us today!

The Game of Business

Business is seen by many people as the ultimate sport. And just as most sports, business requires both offense and defense. Offense in business is everything related to generating more sales. Defense in business is everything related to reducing expenses. Both are required for a business to be profitable.

Successful business owners are often offense minded because they are great at figuring out how to get more sales. But as any sports fanatic will tell you, defense wins championships. Accountants are the defense for a business because they keep the business organized particularly with finances. Without a good accountant, your business might make a lot of money, but you won't keep as much as you should (think of a high scoring game where you only win by 1). Thus the most important characteristics of a good accountant are that they are well organized and good at saving money.

Do I Have to?

For many of our small business clients, their business is too small or simple to necessitate an accountant. They just need help filing their income tax returns. For these clients financial accounting is a necessary evil that is only completed because they need to file a tax return each year. This is often completed by downloading the transactions from the business bank account and organizing them in Excel to create a P&L. We do this frequently for clients.

For a more complex business, we recommend using an accounting software to help you stay organized. The purpose of an accounting software is to save you or your accountant time - this is done through automation and syncing with your bank and credit card accounts. For this purpose we recommend to our clients as it is relatively cheap, can be accessed anywhere and has several time saving features.

At Timp Accounting, we offer accounting services anywhere from "just get it done for the tax return" to part-time CFO work who oversees other staff accountants, creates and documents accounting procedures, creates monthly financial statements, etc. Call or email us today to give your defense a boost!

Facts don't lie.

Data analytics gives facts about your business to increase the efficiency of your resources. Your business resources are your equipment, inventory, employees, physical space, website, marketing dollars, accounts receivable, etc. And with the increase in technology, data analytics has never been easier. To be brief, data analytics is a crossroads between accounting, statistics, marketing, production, and business strategy.

Small business hurdles

Disorganization - Too often we see small businesses that are disorganized and don't know where to begin getting organized. The best place to start getting organized is with accounting because the ultimate goal of the business is to make money. And if your accounting is bad, you don't know if you are making money or going into debt. Your books need to be clean, consistent, and detailed in order to track if business changes you make are improving your bottom line. The next place to start is either the sales team or job costing, whichever is more important to management. Gathering data about your sales team should help improve sales performance. And job costing means to align expenses with their revenue source so that you can see the profitability of each segment of your business (think of a builder with two homes under construction and knowing on which home they made a profit and on which home they lost money).

Poor business strategy - It is easy for small business owners to get caught in the day-to-day tasks and rarely step back to see the big picture. This forces the owners to move from being a technician in their business to being an entrepreneur. Data Analytics requires that the owners and management take time to decide where they are going and how to get there. Without a solid business strategy, your Data Analytics will do little to help your business.

Overwhelmed - We recommend that small businesses start with a small number of metrics. Choose your most important KPIs (key performance indicators) and give it all of your attention. Data analytics is most beneficial when a business can make data-driven decisions to improve business profit. To be data-driven requires that you have complete trust in the data (how it is gathered and how it is interpreted).

Gathering Data - Gathering data needs to be as automatic as possible. This increases data integrity and costs less. There should also be written guidelines that give clarity to what the data represents to create reliable data and to avoid confusion. If you don't measure it correctly, you can't improve it.

Decision Making

One of the best aspects of data analytics is the speed it allows the company to make corrections. Notice how each of the following questions requires an immediate response that will make the company more profitable by fixing it quickly: Which large client is almost late on their payment that needs to be called by an executive today? Which employees are underperforming and need more training now? Why did our website not produce any leads this morning?

If data is not being used to make business decisions, you are doing something wrong. Either you don’t trust the data, the reports provided are not actionable, or the leadership doesn’t understand its importance. If the business is not increasing their bottom line after implementing data analytics then they are wasting their time and money.

At Timp Accounting, we offer data analytics consulting. We help small businesses make the shift to becoming a data-driven business with excellent profit margins. So if you'd like your business to stop "winging it", give us a call today to find out how we can help.